Exuding challenges confronted by the solar industry due to scarcity of funds, FICCI solar energy task force has asked the government to make available low cost capital to provide a competitive edge to the Indian solar value chain.

NEW DELHI: Given the challenges confronted by the solar industry due to scarcity of funds, FICCI solar energy task force has asked the government to make available low cost capital to provide a competitive edge to the Indian solar value chain.

As per an estimate given by FICCI solar task force -- representing the entire value chain of the solar industry -- the difference between the lending rates of Indian banks and that of foreign lenders is around 10%.

Notably, rate of finance in India is between 13-14 per cent, whereas countries like Germany and China have kept it as low as 5-6 per cent and 3-4 per cent respectively.

"This difference puts pressure on the solar energy industry resulting in increase in the price of indigenously manufactured solar equipment or per unit cost of solar power generation," FICCI said.

Higher cost of debt financing for solar project development or manufacturing has been a deterrent in its growth and makes them vulnerable to foreign lenders' terms and conditions. 'Debt from the foreign financial institutions comes with riders that force project developers to accede to their terms and conditions," FICCI said.